IDEAS home Printed from https://ideas.repec.org/a/eee/bracre/v43y2011i3p173-185.html
   My bibliography  Save this article

UK investors’ perceptions of auditor independence

Author

Listed:
  • Dart, Eleanor

Abstract

The auditor’s role in society is that of validating the truth and fairness of financial statements. If owners of organisations doubt the auditor’s independence, financial statements will lack credibility. This questionnaire-based study investigated how investors perceive three potentially independence-impairing auditor–client relationships: the joint provision of audit and non-audit services, an audit firm’s economic dependence upon a client and long-term relationships between auditor and client. The objective was to determine whether, after a series of high-profile corporate collapses, owners retain faith in the integrity of the auditor. The results suggest that economic dependence and the provision of non-audit services are perceived as greater threats to auditor independence than long-term relationships between the auditor and client.

Suggested Citation

  • Dart, Eleanor, 2011. "UK investors’ perceptions of auditor independence," The British Accounting Review, Elsevier, vol. 43(3), pages 173-185.
    • Handle: RePEc:eee:bracre:v:43:y:2011:i:3:p:173-185
    DOI: 10.1016/j.bar.2011.06.003
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0890838911000503
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.bar.2011.06.003?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Quick, Reiner & Warming-Rasmussen, B., 2005. "The impact of MAS on perceived auditor independence - some evidence from Denmark," Publications of Darmstadt Technical University, Institute for Business Studies (BWL) 24921, Darmstadt Technical University, Department of Business Administration, Economics and Law, Institute for Business Studies (BWL).
    2. Quick, Reiner & Warming-Rasmussen, B., 2009. "Auditor Independence and the Provision of Non-Audit Services: Perceptions by German Investors," Publications of Darmstadt Technical University, Institute for Business Studies (BWL) 39453, Darmstadt Technical University, Department of Business Administration, Economics and Law, Institute for Business Studies (BWL).
    3. Inder K. Khurana & K. K. Raman, 2006. "Do Investors Care about the Auditor's Economic Dependence on the Client?," Contemporary Accounting Research, John Wiley & Sons, vol. 23(4), pages 977-1016, December.
    4. Powell, Melanie & Ansic, David, 1997. "Gender differences in risk behaviour in financial decision-making: An experimental analysis," Journal of Economic Psychology, Elsevier, vol. 18(6), pages 605-628, November.
    5. David Hay & Robert Knechel & Vivian Li, 2006. "Non‐audit Services and Auditor Independence: New Zealand Evidence," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 33(5‐6), pages 715-734, June.
    6. Mckinley, S & Pany, K & Reckers, Pmj, 1985. "An Examination Of The Influence Of Cpa Firm Type, Size, And Mas Provision On Loan Officer Decisions And Perceptions," Journal of Accounting Research, Wiley Blackwell, vol. 23(2), pages 887-896.
    7. Dykxhoorn, Hans J. & Sinning, Kathleen E., 1982. "Perceptions of auditor independence: Its perceived effect on the loan and investment decisions of German financial statement users," Accounting, Organizations and Society, Elsevier, vol. 7(4), pages 337-347, October.
    8. Lavin, David, 1977. "Some effects of the perceived independence of the auditor," Accounting, Organizations and Society, Elsevier, vol. 2(3), pages 237-244, June.
    9. Reiner Quick & Bent Warming-Rasmussen, 2005. "The impact of MAS on perceived auditor independence-some evidence from Denmark," Accounting Forum, Taylor & Francis Journals, vol. 29(2), pages 137-168, June.
    10. Roger Hussey, 1999. "The Familiarity Threat and Auditor Independence," Corporate Governance: An International Review, Wiley Blackwell, vol. 7(2), pages 190-197, April.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Alleyne, Philmore & Hudaib, Mohammad & Pike, Richard, 2013. "Towards a conceptual model of whistle-blowing intentions among external auditors," The British Accounting Review, Elsevier, vol. 45(1), pages 10-23.
    2. Maroun, Warren & Atkins, Jill, 2014. "Section 45 of the Auditing Profession Act: Blowing the whistle for audit quality?," The British Accounting Review, Elsevier, vol. 46(3), pages 248-263.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Meuwissen, Roger & Quick, Reiner, 2019. "The effects of non-audit services on auditor independence: An experimental investigation of supervisory board members’ perceptions," Journal of International Accounting, Auditing and Taxation, Elsevier, vol. 36(C), pages 1-1.
    2. Roger Meuwissen & Reiner Quick, 2009. "Abschlussprüfung und Beratung - Eine experimentelle Analyse der Auswirkungen auf Unabhängigkeitswahrnehmungen deutscher Aufsichtsräte," Schmalenbach Journal of Business Research, Springer, vol. 61(4), pages 382-415, June.
    3. Daniela Hohenfels & Reiner Quick, 2020. "Non-audit services and audit quality: evidence from Germany," Review of Managerial Science, Springer, vol. 14(5), pages 959-1007, October.
    4. Reshma Kumari Tiwari & Jasojit Debnath, 2021. "Joint Provision of Non-audit Services to Audit Clients: Empirical Evidences from India," Vikalpa: The Journal for Decision Makers, , vol. 46(3), pages 153-165, September.
    5. Cédric Lesage & Sabine Ratzinger & Jaana Kettunen, 2012. "Struggle over joint audit: on behalf of public interest?," Post-Print hal-00935004, HAL.
    6. Mariana Cristina BULUCEA, 2020. "Audit Firm Rotation And Audit Quality: Case Of The Listed Romanian Firms," Annales Universitatis Apulensis Series Oeconomica, Faculty of Sciences, "1 Decembrie 1918" University, Alba Iulia, vol. 2(22), pages 158-168.
    7. Thomas G. Calderon, 2008. "Determinants of client-initiated and auditor-initiated auditor changes," Managerial Auditing Journal, Emerald Group Publishing, vol. 23(1), pages 4-25, January.
    8. Schneider, Arnold, 2018. "Studies on the impact of accounting information and assurance on commercial lending judgments," Journal of Accounting Literature, Elsevier, vol. 41(C), pages 63-74.
    9. Domenico Campa & Ray Donnelly, 2016. "Non-audit services provided to audit clients, independence of mind and independence in appearance: latest evidence from large UK listed companies," Accounting and Business Research, Taylor & Francis Journals, vol. 46(4), pages 422-449, June.
    10. Philip Law, 2008. "An empirical comparison of non-Big 4 and Big 4 auditors' perceptions of auditor independence," Managerial Auditing Journal, Emerald Group Publishing, vol. 23(9), pages 917-934, October.
    11. Reiner Quick & Matthias Sattler, 2012. "Erwiderung auf Hansrudi Lenz: Eine wissenschaftsethische Anmerkung zum Beitrag „Beeinträchtigen Beratungsleistungen die Urteilsfreiheit des Abschlussprüfers? Zum Einfluss von Beratungshonoraren auf di," Schmalenbach Journal of Business Research, Springer, vol. 64(3), pages 271-279, May.
    12. Anastasia Kraft & Kerstin Lopatta, 2016. "Auditor fees, discretionary book-tax differences, and tax avoidance," International Journal of Economics and Accounting, Inderscience Enterprises Ltd, vol. 7(2), pages 127-155.
    13. Svanberg, Jan & Öhman, Peter & Neidermeyer, Presha E., 2019. "Auditor objectivity as a function of auditor negotiation self-efficacy beliefs," Advances in accounting, Elsevier, vol. 44(C), pages 121-131.
    14. Mikko Zerni, 2012. "Do client firms manage the perception of auditor independence?: Evidence from the Swedish non-audit service market," Managerial Auditing Journal, Emerald Group Publishing, vol. 27(9), pages 821-845, October.
    15. Bugeja, Martin, 2011. "Takeover premiums and the perception of auditor independence and reputation," The British Accounting Review, Elsevier, vol. 43(4), pages 278-293.
    16. Christopher Bleibtreu & Ulrike Stefani, 2011. "Auditing, Consulting, and Audit Market Concentration," Working Paper Series of the Department of Economics, University of Konstanz 2011-28, Department of Economics, University of Konstanz.
    17. Al-Okaily, Jihad & BenYoussef, Nourhene, 2020. "Audit committee effectiveness and non-audit service fees: Evidence from UK family firms," Journal of International Accounting, Auditing and Taxation, Elsevier, vol. 41(C).
    18. Becchetti, Leonardo & Degli Antoni, Giacomo & Ottone, Stefania & Solferino, Nazaria, 2013. "Allocation criteria under task performance: The gendered preference for protection," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 45(C), pages 96-111.
    19. Girardone, Claudia & Kokas, Sotirios & Wood, Geoffrey, 2021. "Diversity and women in finance: Challenges and future perspectives," Journal of Corporate Finance, Elsevier, vol. 71(C).
    20. Momparler, Alexandre & Carmona, Pedro & Lassala, Carlos, 2015. "Quality of consulting services and consulting fees," Journal of Business Research, Elsevier, vol. 68(7), pages 1458-1462.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:bracre:v:43:y:2011:i:3:p:173-185. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: https://www.journals.elsevier.com/the-british-accounting-review .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.